Due Diligence Guidelines –
Provision of Information to Analysts
Addendum 9: Form of Letter to be Signed by Syndicate Members (for exceptional situations)
Substantially all the content of this form is derived from the standard research report guidelines which will be made contractually binding by way of “deemed agreement”. This form of letter is therefore not required in usual situations, as research analysts have been alerted to their obligations by way of the research report guidelines. However, in exceptional cases, Sponsor(s) / Global Coordinators may prefer to request a written agreement to be signed and returned by syndicate members, for example where the syndicate member is less familiar with market practice. This is the recommended form to be used in such a situation.
Distribution of research reports by Syndicate Members
The undersigned hereby represents to you, and agrees with you, that it: (i) has received a copy of, (ii) has read and understands and (iii) will comply with the memorandum dated [•] titled “[•] – Syndicate Analysts’ research reports” (the “Research Report Memorandum”) and the procedures set out therein, which outline certain restrictions on the preparation, content and distribution of research reports regarding the proposed initial public offering (the “Offering”) by [•] (the “Company”).
The undersigned undertakes that it (or its associates) will comply with all applicable legal and regulatory requirements, including but not limited to paragraph 16 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (if applicable) in connection with the content and issue of the research reports.
The undersigned confirms and represents to you that:
1. our investment banking department does not pre-approve analyst reports, except in circumstances, subject to oversight by our compliance or legal department, where our investment banking department reviews a research report for factual accuracy before publication;
2. we have established adequate controls and procedures as required by relevant market regulators, including but not limited to:
(a) appropriate “Chinese wall(s)” (or information barriers) within our organisation to ensure separation between our investment banking department, corporate finance department, underwriting department and research department such that the form and content of research reports will be prepared independently by our analysts in our research department;
(b) establishment and maintenance of written policies and control procedures to ensure that we will not provide our research analysts with any material information relating to the Company that will not be contained, summarised or otherwise reflected in the prospectus or offering memorandum to be issued by the Company;
3. research reports prepared by our research analysts are our own research prepared independently of the Company;
4. research reports prepared by us will not be disseminated to the general public and will only be circulated to a limited number of persons to whom the research analysts customarily give research reports, and that this list of recipients will be carefully scrutinised and restricted to include only institutional investors who our sales and/or equity capital markets departments deem may potentially have an interest in the Company’s shares or in the Offering; we agree to maintain a list of all recipients of our research reports and to assign persons with relevant knowledge and experience to review the list to ensure that it does not contain recipients who are members of the press or media, and we agree not to distribute the research reports to anyone who we have reasonable grounds to suspect may have violated the conditions of receiving research reports in the past;
5. any information disclosed to us at the analysts’ presentation has been and will be kept confidential save for the distribution of the research reports in accordance with the Research Report Memorandum; and
6. research reports prepared by us will not be sent to the United States, Canada [, the PRC] or Japan, [or to a US person (as defined in Regulation S under the US Securities Act of 1933 (the “Securities Act”))].
We understand and acknowledge that our failure to comply with the Procedures could result in our removal from the syndicate if such non-compliance, in the judgment of the Global Coordinator(s) and Sponsor(s), among other things, creates a risk of violation of law or regulation, a delay or prevention of the Offering by the relevant regulatory authorities or a misleading impression being generated in the market.
[NAME OF SYNDICATE MEMBER]
HKCFEF Limited and the contributing law firms, accountants and sponsors are not offering these due diligence guidelines as legal, financial or professional advice or services and they should not be relied upon as such. These due diligence guidelines should not be used as a sole basis for any decision, action or inaction and are not meant to serve as a substitute for the advice of qualified professionals. See here for the full terms and conditions.